Skill level: Basic, intermediate
Organizations must employ methods and procedures that are measurable. Declaring success is difficult if there is nothing in place that can be measured to show proof of that success.
Critical success measures should not be confused with critical success factors. Critical success factors are measured strategically, whereas critical success measures are key performance indicators that are quantitatively measured. For example, a critical success factor might be the implementation of a new sales strategy, and the critical success measures would be the results of that strategy translated into total sales per region.
Three key criteria must be met in order to ensure that measures are critical and meaningful:
- The information must be critical to the success of your company or organization.
- It must be measurable and quantifiable.
- A baseline must be established in order to measure progress or changes.
- Set and clearly quantify key performance indicators
- Define clear characteristics of success measures
- Easily adaptable to any situation
- Vital component of organization performance measurement
How to Use
- Step 1. Brainstorm and list the critical measures needed.
- Step 2. Stratify/organize measures with common objectives.
- Step 3. Establish where and when they will be used (monthly scorecard, weekly report).
- Step 4. Define how you are going to measure them.
- Step 5. Implement, measure, and adjust as needed.
Stratification (stratify): An action of regrouping concepts, ideas, or proposals that have a similar meaning or objectives.
Critical success factors: A tool for defining factors that can be used to assess the value of an idea or concept.
An organization’s goal is to increase sales in all regions, so it selects these critical success measures:
- Average sales per store or region
- Sales ($) per sales person
- Sales ($) per square foot
- Profitability (%)
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